JP Morgan Chase Background Information

JP Morgan Chase could trace its roots to the Bank of Manhattan, founded in 1799 by Arron Burr, six years before he killed Alexander Hamilton in a duel. Instead, the firm links its heritage to Canal Bank, which was formed in 1831. Yet, JP Morgan Chase’s CEO recently admitted that Canal Bank financed slavery and owned over 1,200 slaves through loan defaults.

Canal Bank was taken over by Chase Bank a century later. However, in 1955, Chase was bought by Manhattan Bank. In 1996, Chase Manhattan was itself taken over by Chemical Bank, which selected the Chase name. “Chemical” Bank had started as a chemical company in 1823. When J.P. Morgan was bought in 2000, the firm became J.P. Morgan Chase & Co.

John Pierpont Morgan, a private financier (and some say profiteer during and after the Civil War) helped form Drexel, Morgan & Co in 1895, an investment banking firm which soon used only his name. He also took over U.S. Steel in 1901, and reportedly bailed out the U.S. Treasury in 1896 and again in 1907, before the Federal Reserve System was created in 1914. He also bailed out and combined bankrupt railroads, stacked their boards and “stabilized” rail rates before these were the first to be “busted” by the Sherman Anti-Trust Act. His empire was estimated to be worth over $22 billion in 1912.

JP Morgan & Company built its Wall Street headquarters, “The House of Morgan,” in 1914, which was the center of American finance for decades. During WWI, JP Morgan Co. financed war efforts and became the monopoly underwriter of war bonds for England and France. A bomb exploded in front of The House of Morgan in 1920, killing 38 and injuring 400. Terrorists left an anti-American note but were never caught.

In the 1930s, the Glass-Steagall Act required financial firms to choose between banking and investment banking. JP Morgan & Co. chose banking. Meanwhile, many of its former investment bankers, including the founder’s grandson, left to form the firm Morgan Stanley.

J.P. Morgan began operating as only a bank in 1935 and two decades later merged with Guaranty Trust to form Morgan Guaranty Trust Company. That firm created a holding company called J.P. Morgan & Co. When it merged with Chase Manhattan in 2000, the new firm became JP Morgan Chase & Company. As laws changed to again allow banking and investment banking by the same firm, the bank reentered the field of investments through a series of acquisitions.

JPMorgan Chase is now the 3rd largest financial institution in the United States, behind Bank of America and Citigroup. It has $1.3 trillion in assets, 175,000 employees worldwide in 6 divisions and $172, billion in market capitalization. It also operates the largest hedge fund in the U.S. with $34 billion in assets. In 2006, the firm earned $13 billion from $61 billion in revenues.

[On “9-11” in 2001, a second terrorist attack hit the firm’s headquarters. Since then, cash-rich JP Morgan Chase has reportedly received over $750 in taxpayer finance subsidies.]

Our law firm represents institutional and individual investors nationwide with significant losses in their portfolios, retirement plans or investment accounts. Our attorneys and staff have more than 100 years of combined experience in the securities industry and in securities law. Several of our lawyers served for years as Vice President or Compliance Officer of brokerage firms.

Each lawyer and staff member of our firm is devoted to assisting investors to recover losses caused by unsuitability, over-concentration, fraud, misrepresentation, self-dealing, unauthorized trades or other wrongful acts, whether intentional or negligent. We have handled over a thousand cases against hundreds of large and small investment firms, including claims against JP Morgan Chase and its subsidiaries, including Banc One.

Call us at (800)259-9010 or contact us through our Website to arrange a free confidential consultation with an attorney to discuss your experiences with an investment advisor or financial firm which resulted in losses.

Additional Information on JP Morgan Chase:

JP Morgan Chase Settles Worldcom Suit For $2 Bil.

Just one day after a New York jury convicted WorldCom’s former CEO of criminal fraud, and just one day before JP Morgan Chase & Co. was to go to trial, the company announced it would pay $2 billion to settle an investor class action against it for its role in the sale of WorldCom bonds.

The bondholders, mostly large institutions including banks, lost over $13 billion. In their lawsuit, they accused several banks of helping the company to sell bonds in 2000 and 2001, just before the WorldCom scandal surfaced, saying these banks knew or should have known WordCom was lying about its finances

Fourteen investment banks, including JPMorgan Chase, have agreed to pay $6 billion to settle the case, a record for securities fraud actions. “This certainly blows away any we’ve seen so far,” said a vice president of Institutional Shareholder Services who tracks securities settlements. The record had been a $3.1 billion settlement with Cendant Corp. The percent of losses recovered in the Worldcom bond case is also quite high and, because defendants remain in the case, that amount will likely grow.

JP Morgan Chase Fined for Role in Enron Fraud

The Securities and Exchange Commission settled enforcement proceedings against JP Morgan Chase & Co. by fining it $135 Million for its role in Enron’s manipulation of its financial statements, saying it helped Enron mislead its investors by characterizing what were essentially loan proceeds as cash from operating activities.

JP Morgan Chase consented to the entry of a final judgment in that action that, without it admitting or denying liability, would also permanently enjoin the firm violating the antifraud provisions of the federal securities laws.

This case “serves as yet another reminder that you can’t turn a blind eye to the consequences of your actions if you know or have reason to know that you are helping a company mislead its investors, you are in violation of the federal securities laws,” said the SEC’s Enforcement Director.

JP Morgan Pays Enron Shareholders $2.2 Billion

In another step to end its Enron woes, JP Morgan agreed to settle a class action filed by former Enron shareholders by paying them a total of $2.2 billion.

The firm first set aside a $1 billion to settle Enron suits, but was also able to settle with its insurance companies for almost $600 million. The insurance companies had disputed the claim and J.P. Morgan had to file suit.

The insurance companies then claimed that JP Morgan had defrauded insurers, disguising loans to Enron as commodities trades and therefore participated in the fraudulent transactions. Fraudulent acts are generally not covered by insurance.

JP Morgan Chase Reaches Deal in Copper Scandal

J.P. Morgan Chase & Company settled a long-running antitrust lawsuit filed by copper companies who claimed the bank’s predecessor conspired with a Japanese trading house to manipulate the copper market in the 1990s.

As the trial was scheduled to begin in federal court, the parties to the suit reached a confidential settlement. About 20 manufacturing companies who claimed they purchased copper at inflated prices sought as much as $1 billion in damages and attorney fees from J.P. Morgan.

The multibillion dollar copper trading scandal upset world copper markets and damaged the reputation of Sumitomo Corp, a 300-year-old Japanese global metals trader. Its star copper trader had created $2.6 billion in losses through unauthorized trades over a decade, and caused copper prices to plummet worldwide.

The companies claimed that before the collapse, J.P. Morgan and one of its subsidiaries provided financing to help the trader artificially reduce copper supplies to drive up prices. This was allegedly done by buying up parts of the copper market so supplies owned by Sumitomo would be worth more, the suit claimed.

Sumitomo had paid millions of dollars to settle cases and class-action suits filed in the U.S. and abroad. Because the damages it sought from JP Morgan included for federal antitrust claims, it could have won triple damages.

JP Morgan Plagued by Greek Bond Mess

In the latest twist in a JP Morgan bond debacle, that firm told a Greek parliamentary committee investigating an overpriced bond scam that it was misled by a former employee.

The scandal began when JP Morgan and North Asset Management sold 280m of structured bonds to the Greek government pension which were later claimed to have been overpriced. Although JP Morgan has since offered to buy back the bonds, publicity and political overtones have created an atmosphere in which any such quick ending does not appear possible.

The debacle has created severe repercussions and paralyzed Greece on 15 May 2007, when flights were grounded in a 24 hour strike by unions protesting mismanagement of their members’ pensions. The scandal also led to the resignation of the head of the civil servants’ Auxiliary Pension Fund.

JP Morgan Fined $2 Million for E-mail Lapses

JP Morgan was fined $2.1 million by the Securities and Exchange Commission, the New York Stock Exchange and National Association of Securities Dealers (NASD) over E-mail record keeping violations.

All three regulators had instigated actions against JP Morgan Securities and investigated alleged conflicts of interest and undue influence of investment banking interests on securities research.

According to the SEC, this led to the discovery that JP Morgan Securities’ E-mail record keeping was improper. According to Reuters, the SEC found that some back-up tapes were suspiciously damaged, missing, and/or not retained. Corporate scandals such as Enron and Worldcom, and the passing of the Sarbanes-Oxley Act have highlighted the need for adequate internal record keeping.

“JP Morgan Securities’ representation that its e-mail production was complete, without disclosing that it had failed to retain, locate and restore all e-mail responsive to our investigation, is simply unacceptable,” said the chief of SEC enforcement.

JP Morgan Unit Fined in Late Trading Scandal

The National Association of Securities Dealers censured and levied a $400,000 fine on Banc One Securities Corp., a subsidiary of JP Morgan, for inadequate systems and procedures to detect and prevent late trading in mutual funds and for inaccurately recording entry times for customer orders.

Late trading refers to the practice of placing orders to buy or sell fund shares after the 4 p.m. ET market close, at the net asset value, or price, preciously set at the market close. Late trading allows traders to profit from market-moving events which occur after the close of the market which are not reflected in that day’s closing share price.

“Late trading is illegal and to prevent it, firms must implement systems to guarantee that all mutual fund orders processed after the close of the market were received during normal trading hours,” said a NASD Vice Chairman.

The NASD found that, Banc One processed about 5,400 mutual fund orders after market close, during the period investigated, at that day’s closing price. While the evidence was inconclusive as to when some of the orders arrived, for others there was evidence the order placed after the close.

NASD Fines JP Morgan for IOP Profit Sharing

The claims arose over an investigation into inflated commissions charged to customers J.P. Morgan neither admitted nor denied the allegations, but consented to the entry of findings.

According to the NASD, the JP Morgan Unit was a top manager of IPO’s and, to boost its margins on allocations, the Unit would raise commissions on unrelated trades as a way of tapping into the outrageous profits initial IPO holders gained by flipping their shares in a hot market, the NASD alleged.

For example, the NASD pointed to a trading day that generated $590,000 in commission revenue and claims that the next day, when an H&Q-led IPO began trading, the firm billed $2.2 million much more than a standard commission, of perhaps 6 cents per share, could generate.

The company was previously hurt by its overexposure to bad tech and telecom debt, and the NASD quoted one sales person as saying, “My baby’s going to college!” after pulling off two trades with a 50 cents per share commission.

The regulator even pointed to an internal e-mail from the firm’s compliance department warning about investors about making “wash trades” to pony up on higher commissions. A customer would buy non-IPO-related shares at a high commission and sell shares of the same company through another broker. Such offsetting trades were done purely to reward the IPO-offering bank, the NASD said.

JP Morgan was also previously hit with an $80 Million fine by national and state regulators for its part in the widespread research scandal which rocked Wall Street.

From The Blog

According to Alayne Fleischmann, the whistleblower who gave the evidence which helped resident in a $13 billion mortgage settlement from JPMorgan Chase(JPM) to the U.S. Department of Justice last year, that amount was not enough. Fleischmann, a lawyer, joined the financial firm as a deal manager in 2006.
She says that not long after she started working there she noticed that about half of the loans in a multimillion-loan pool included overstated incomes. Such loans, she said, were likely at risk for default—a precarious position for both the investors and the securities. Fleischmann said that she notified management about how the bank was re-selling subprime mortgages to customers without letting them know about the risks. She also spoke about how one bank manager wanted to put in place a non-email policy so there would be no paper trail to show that the firm was aware that such activities were happening.
It was the sale of toxic sub-prime loans by JPMorgan and other US banks that incited the US housing market crisis, which eventually spurred the global financial meltdown of 2008. Repackaged loans were sold to pension funds and other institutional investors, with many buyers unaware of the high default risks involved.
Fleischman was let go from JPMorgan in early 2008. The U.S. Securities and Exchange Commission reached out to her later that year. Even though she had signed a non-disclosure agreement when leaving the firm, this did not preclude her from talking about criminal wrongdoing, including the selling of toxic sub-prime mortgage products.
Prosecutors used the information to negotiate a $9 billion mortgage fraud settlement with JPMorgan, in addition to $4 billion relief for homeowners that included mortgage modifications for homeowners at risk of foreclosure. Yet no criminal charges have been brought in this matter.
After signing an approximately 10-page “statements of fact, JPMorgan Chase CFO Marianne Lake spoke out, noting that despite the settlement, the firm was not admitting to having violated any laws. The settlement did not even have to pass court approval. The firm also was able to take some $7 billion of the settlement and use it as a tax write-off.
Fleischmann, who recently outed herself as the whistleblower in a Rolling Stone article, believes that individuals who took part in the infringements that lead to the housing crisis should be held responsible for their crimes. According to journalist Matt Taibbi who wrote the article, she said that a number of other historical settlements with the DOJ, including those made with Bank of America (BAC) and Citigroup (C) were actually deals in which “cash for secrecy,” was the trade.
Institutional investors were the ones that suffered when they were sold toxic sub-prime mortgages instruments. Our mortgage-backed securities fraud lawyers have been working hard over the last six years to help investors recoup their losses. Contact the SSEK Partners Group today.
The $9 Billion Witness: Meet JPMorgan Chase's Worst Nightmare, Rolling Stone, November 6, 2014
‘Occupy made it possible’: JPMorgan whistleblower Fleischmann to Max Keiser, RT.com, November 13, 2014
JPMorgan settlement not enough, says whistleblower, CNBC, November 12, 2014
JPMorgan agrees to $13 billion mortgage settlement, CNN, November 19, 2013
More Blog Posts: SEC Sanctions UBS, Charles Swab, Oppenheimer, & 10 Other Firms For Improper Sales of Puerto Rico Junk Bonds, Stockbroker Fraud Blog, November 3, 2014
SEC News: Regulator Grants $30M Whistleblower Award and Charges Washington Investment Advisory Firm $600K for Undisclosed Principal Transaction, False Advertising, Stockbroker Fraud Blog, September 23, 2014

Better Markets, a non-profit group, is suing the US Department of Justice to block the $13 billion mortgage-backed securities settlement reached between the federal government and JP Morgan Chase (JPM). The group wants the deal to undergo judicial review.
The settlement resolves DOJ mortgage bond claims with a$2 billion civil penalty and includes $4 billion of consumer relief, another $4 billion to settle claims related to Freddie Mac and Fannie Mae, and another $1.4 billion to settle a National Credit Union Administration-instigated securities case. JPMorgan sold the mortgage bonds in question in the years heading into the housing market collapse. The loans that were involved lost value or defaulted when the bubble burst.
As part of the agreement, the firm acknowledged that it made “serious misrepresentations” about the MBS to investors. While the deal doesn’t release bank from criminal liability, it grants civil immunity for its purported actions. Now, Better Markets, which describes itself as a “Wall Street” watchdog, is saying that the record settlement between the US government and JP Morgan was “unlawful” because a court did not review the deal.
According to Better Markets CEO Dennis Kelleher, the DOJ served as “investigator, prosecutor, judge, juror, sentencer and collector” when negotiating the securities settlement and he wonders whether the payment is sufficient to offset the harm suffered by the economy. His group also claims that the government agency and U.S. Attorney General Eric Holder have a “conflict of interest” and are using the $13 billion deal to repair their “reputations.”
In other JPMorgan-related news, the Securities and Exchange Commission says two of the bank’s former traders that are accused of concealing over $2 billion in losses involving wrong-way derivatives bets don’t have the right to see evidence gathered by the government because they are fugitives. Julien Grout and Javier Martin-Artajo have yet to show up in this country to face civil and criminal claims and should therefore not be granted evidence or be able to question witnesses in the regulator’s case. Martin-Artajo, who oversaw the synthetic portfolio’s trading strategy, now resides in Spain. Grout, who worked under him as a trader, now lives in France.
The office of Manhattan U.S. Attorney Preet Bharara is accusing the two men of securities fraud related to trades by Bruno Iksil, who was central to the London Whale debacle. The SEC says the ex-JPMorgan employees sought to improve portfolio performance to gain approval at work.
At the SSEK Partners Group, our mortgage-backed securities lawyers represent high net worth clients and institutional investors. Your initial case assessment is a no obligation, free consultation.
Feds sued over $13B deal with JPMorgan Chase, CBS News, February 10, 2014
Ex-JPMorgan Traders Not Entitled to Evidence, SEC Says, Bloomberg, February 10, 2014
Better Markets Inc. v. U.S. Department of JusticeJPMorgan agrees to $13 billion mortgage settlement, CNN, November 19, 2013
More Blog Posts:JPMorgan Will Pay $614M to US Government Over Mortgage Fraud Lawsuit, Stockbroker Fraud Blog, February 8, 2014
J.P. Morgan’s $13B Residential Mortgage-Backed Securities Deal with the DOJ Stumbles Into Obstacles, Stockbroker Fraud Blog, October 28, 2013